Mon | Apr 19, 2021

Petrojam warns of price fluctuations amid oil market volatility

Published:Monday | March 8, 2021 | 2:51 PM
At a press conference this morning to discuss the vexed issue of sharp increases in the price of fuel in the last three months, Watson said that pricing at Petrojam was transparent and based on market references that the state-owned refinery has to follow in the industry.

Volatility in the oil market at this time could result in further increases in the price of petrol, the state-owned oil refinery, Petrojam, has signalled.

General Manager of Petrojam, Winston Watson, says he is also not ruling out reductions in the price of fuel.

At a press conference this morning to discuss the vexed issue of sharp increases in the price of fuel in the last three months, Watson said that pricing at Petrojam was transparent and based on market references that the state-owned refinery has to follow in the industry.

He said that Petrojam’s pricing mechanism allowed for “some amount of smoothing of the price using the weekly average” to ensure that the volatility of the US Gulf Coast prices does not have an immediate impact on local prices.

The US Gulf Coast Reference Price, which Petrojam uses as part of a mechanism to price finished products, has been increasing consistently since December 2020.  

Watson told journalists that E-10 87 unleaded gasolene increased by US$27.89 per barrel or 53 per cent between December 2020 and March 2021.

The Petrojam boss noted that the ex-refinery billing price locally for the same 87 unleaded gasolene increased by J$24.97 per litre or 27 per cent over the corresponding period.

“This is equivalent to an increase of US$22.66 per barrel or 19.4 per cent,” he added.

He attributed the volatility in the oil market to geopolitical issues involving Iran, Saudi Arabia, and the United States.

Watson said that oil facilities interrupted by freezing conditions in Texas would take some time to become fully operational again.

The Houston Chronicle reported today that four of the largest refineries in Texas had detected significant damage from the deep freeze that impacted the state recently.

The refineries are expected to undergo repairs in the weeks ahead, which could mean the likelihood of prolonged fuel shortages that could affect the country.

“With the volatility now in the marketplace I am anticipating that we are going to see prices go up and down as per the US Gulf reference,” Watson said.

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